HR's take on a $15 minimum wage

It's complicated, and the research is confusing

Jul 11, 2017

People celebrate the passage of the minimum wage for fast-food workers by the New York State Fast Food Wage Board during a rally in New York in 2015. Ontario has announced plans to raise its minimum wage to $15 by 2019. REUTERS/Brendan McDermid

By Todd Humber

Confused about where you stand on the $15 per hour minimum wage debate?

You’re not alone.

And it’s totally understandable.

The knee-jerk reaction from the labour movement is “Yeeeeha!” It’s great for workers and will lift hard-working families out of poverty. Employers bristle with equal fervor, saying it will drive inflation up, lead to cuts in hours worked and reduce the number of employees hired. It may even drive them out of business altogether.

On Canadian HR Reporter’s website, both sides of the argument played out. Within a couple of days, we posted competing stories on the Seattle experience — that West Coast U.S. city essentially adopted a $15 minimum wage in 2015.

The first story was filled with glowing reviews, based on research out of the University of California at Berkeley. The higher wage led to more money in the pockets of restaurant workers without hurting jobs.

The second story, based on research out of the University of Washington, found pay had indeed jumped in low-paying jobs but there was a problematic side effect — a nine per cent decrease in hours worked. In real dollars, that’s a $125 pay cut.

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“If you’re a low-skilled worker with one of those jobs, $125 a month is a sizable amount of money,” said Mark Long, one of the authors of the study. “It can be the difference between being able to pay your rent and not being able to pay your rent.”

The academics behind the competing studies took pot shots at each other and the merits of the research, but it highlights the fact that raising the minimum wage is complicated at best, and you can find data to back up whatever point of view you want to hold.

Regardless, plenty of jurisdictions are marching towards the $15 threshold. South of the border, New York and California have passed measures to gradually implement the higher wage. Last year, Alberta announced it was riding into that territory. Now Ontario is holding consultations as it seeks to raise its minimum wage to $15 by 2019, and a movement is afoot in Quebec.

The noise in Ontario is as loud as it is predictable. (See above.) A coalition of employers said many businesses in the province — especially smaller ones — are “now considering closing their business because they do not have the capacity to successfully manage such reforms.”

Hard to argue with the fact that employers want predictability in wage increases — a 32 per cent hike in less than 18 months, as Ontario is planning, isn’t small potatoes.

And if we let the pendulum swing back, it’s hard to argue with economists — who know a heck of lot more than me, and probably more than you too — who say the negative impacts are small to negligible. But the positive, in terms of increased spending on goods and services by a large pool of workers, is considerable.

One thing we do know: Every time the minimum wage debate revs up, we hear doom and gloom scenarios. But, for the most part, the sky didn't fall when wages were raised in the past.

A business publication would likely unequivocally say “Don’t you dare raise it. It’s bad for the economy.” But an HR publication? We’re on the fence. There are benefits to paying workers a living wage that aren’t evident on a ledger.

But as more jurisdictions make the push, we’re certainly going to have some hard data to tell us the real answer in very short order.